Don’t be intimidated by the lofty definitions of product strategy you’ve seen so far!
Product strategy is like the GPS you trust.
Just as a GPS helps you get to your destination avoiding traffic jams & roadblocks, a product strategy steers your idea from a whiteboard to sustained market success.
Notice the emphasis on ‘sustained’? That’s right!
It means, Product strategy is not static. It evolves with the product & the market it operates in.
Ever tried assembling IKEA furniture without the manual? Did you end up with extra screws and a wobbly chair?
A clear product strategy is like that instruction manual. It ensures you have the right parts and steps to build a sturdy product that everyone loves.
Product strategy is essential because it helps you align your team, set clear goals, and navigate the competitive landscape.
In this definitive guide, we’ll explore what product strategy is, why it’s important, its components and how to create one that drives success.
In the last section, we will also cover 10 product strategy examples for product managers.
By the end of this post, expect to have a solid understanding of how to build a product strategy that works.
What is a Product Strategy?
Product strategy is a plan that defines what you want to achieve with your product and how you plan to achieve it, in the long term.
It is not just about what the product is.
It is about why the product exists, who is it for & how it will grow.
Think of it as a blueprint that guides your product development and marketing efforts.
A well-defined product strategy helps you make informed decisions about product features, pricing, and positioning. It also helps ensure that everyone on your team is working towards the same goals.
Importance of Product Strategy
Product launch & growth activities are chaotic with a lot of unknowns thwarting your plans to succeed.
That’s where a strong product strategy acts like a lighthouse guiding your ship through stormy seas.
A detailed product strategy acts as a compass, guiding decisions about product features, target customer segments, and competitive positioning.
Here’s why a strong product strategy is important –
- Market alignment: A key impact of strong Product strategy is that the products are developed with a deep understanding of market needs, keeping in mind trends and opportunities.
- Resource optimization: With limited resources at your disposal, optimizing them becomes a priority. Here, a thought through product strategy helps in efficient allocation of time, money, and human resources. It focuses your efforts on the most promising initiatives.
- Risk mitigation: Market research necessary for formulating product strategy uncovers potential challenges, leading to risk mitigation efforts well in advance.
- Competitive advantage: With emphasis on product differentiation, a strong strategy delivers competitive advantage & helps in creating unique value propositions.
Imagine you’re trying to build a puzzle without the picture on the box. A strong product strategy provides that picture, making it easier to put the pieces together.
Components of a Product Strategy
A robust product strategy is like a well-built car. It has several key components, each serving a unique purpose. These components work together to create a solid structure.
Let us look at each of these components in brief:
- Vision & Mission: The Guiding Stars
- Product Goals & Objectives
- Initiatives: Translating Vision Into Action
- Measuring Success: KPIs & Metrics
Vision and Mission: The Guiding Stars
Vision & Mission statements are the soul of every product strategy.
While product vision is the big picture – the ultimate goal your product is meant to achieve, product mission is more specific. It articulates ‘how the product will help achieve that vision’.
Together, Product vision & mission statements provide a clear direction for your product team.
Product Goals and Objectives
Once you have a clear vision and mission, next logical step is to set goals (or OKRs, if you prefer).
These are the milestones that your product aims to meet.
They provide a roadmap for your product development process. And they help you stay the course in the mid to short term.
Initiatives: Translating Vision into Action
Initiatives are the actions you take on a day-to-day basis to achieve your goals and objectives. They translate your product vision and mission into concrete steps.
Each initiative should be tied to a specific objective. And each initiative should contribute to your overall product goals.
Initiatives can involve various activities. These can include developing new features, improving user experience, or enhancing customer support.
Measuring Success: KPIs and Metrics
This one is a corollary to the above point where you are setting up goals & objectives. You need a way to measure the success of your product strategy.
This is where KPIs (Key Performance Indicators) and metrics come in. KPIs are the key measures of success for your product.
They help you track your progress towards your goals and objectives. (Similar to the GTM metrics detailed here)
Metrics, on the other hand, are specific measures related to your initiatives. They provide detailed insights into the performance of your product.
Choosing the right KPIs and metrics is crucial.
And they should provide actionable insights to your product team.
Product Strategy vs Go-to-market (GTM) Strategy
To avoid confusion, let us take a step back to understand the difference between Product strategy vs Go-to-market (GTM) strategy.
| Product Strategy | Go-To-Market Strategy |
| This is the long-term plan for your product | This is a shorter-term plan that focuses on launching your product |
| It focuses on the vision, target market, competitive landscape, product positioning, and value proposition | It includes tactics for sales, marketing, and distribution |
| It’s about what your product is and how it evolves over time | It’s about how you introduce your product to the market and gain traction |
Think of product strategy as planning the journey and GTM strategy as how you start the trip. Both are crucial, but they serve different purposes.
For example, a company like SpaceX might have a product strategy focused on building rockets that are capable of reaching Mars. Yet their GTM strategy, on the other hand, would detail how they plan to initially gain market share in satellite launches, target potential customers, and handle other logistics.
Create an Effective Product Strategy – Step by step
Crafting a successful product strategy isn’t a mysterious art – it’s a systematic process that combines research, analysis, and creative thinking.
Let’s break it down into manageable steps that you can follow to develop a strategy that will drive your product’s success.
Define Your Product Vision
Start by painting a clear picture of what you want your product to achieve in the long run. This vision should be inspiring and ambitious, yet grounded in reality.
Ask yourself:
- What problem does your product aim to solve?
- Who are your target customers?
- How does your product benefit these customers?
- What makes your product unique?
- Where do you see your product in the future?
Your vision might be something like: “To become the go-to platform for remote teams to collaborate seamlessly, fostering productivity and connection across time zones.”
Conduct Thorough Market Research
You can’t create a winning strategy in a vacuum.
Dig in deeper into your market:
- Analyse competitors: What are they doing well? Where are the gaps?
- Study industry trends: What’s changing? What’s on the horizon?
- Talk to potential customers: What are their pain points? What do they value?
Use frameworks like SWOT analysis (Strengths, Weaknesses, Opportunities, Threats) to organize your findings. This research will help you identify opportunities and potential pitfalls.
Define Your Target Audience
Get specific about who your product is for. Create detailed user personas that include:
- Demographics (age, location, job title)
- Psychographics (values, goals, challenges)
- Behaviour patterns (how they currently solve the problem)
Remember, trying to please everyone often leads to pleasing no one. It’s okay to focus on a specific niche.
Set Clear, Measurable Objectives
Transform your vision into concrete goals. Here are some tips for setting effective product goals and objectives:
- Make them specific and measurable
- Align them with your product vision and mission
- Ensure they are achievable and realistic
- Set a clear timeline for each objective
- Regularly review and update them as needed
For example: “Increase user engagement by 30% within the next 6 months” or “Launch in two new market segments by Q4.”
Identify Your Unique Value Proposition
What makes your product special? Your UVP should clearly communicate:
- The specific benefit your product offers
- How it’s different from competitors
- Why customers should choose you
- Keep it concise and compelling
For instance: “Effortless team collaboration with AI-powered project management, designed for remote-first companies.”
Map Out Your Product Roadmap
Now, plot the course to achieve your objectives. Your roadmap should:
- Outline key features and milestones
- Prioritize items based on value and effort
- Be flexible enough to adapt to changing circumstances
Use techniques like the MoSCoW method (Must have, Should have, Could have, Won’t have) to prioritize features. Remember, your roadmap is a living document – review and adjust it regularly.
Define Your Go-to-Market Strategy
How will you introduce your product to the world? Consider:
- Pricing strategy: Will you offer tiers? Freemium model?
- Distribution channels: Direct sales? App stores? Partnerships?
- Marketing approach: Content marketing? Paid ads? Influencer partnerships?
- Align your go-to-market strategy with your target audience and objectives.
Establish Key Performance Indicators (KPIs)
This is slightly different from just setting goals & objectives. Here, determine how you’ll measure success.
Here are some common KPIs to track success of your product strategy:
- User engagement: How often and how long users interact with your product
- Customer satisfaction: How happy users are with your product
- Conversion rate: The percentage of users who take a desired action
- Retention rate: The percentage of users who continue to use your product over time
- Revenue growth: The increase in revenue generated by your product
Make sure you have systems in place to track these metrics consistently.
Plan for Continuous Learning and Iteration
Your strategy shouldn’t be set in stone.
Plan for regular check-ins to:
- Analyse performance against KPIs
- Gather and incorporate user feedback
- Stay updated on market changes
- Adjust your strategy as needed
Consider implementing an agile approach, with sprints and retrospectives to continuously improve your product and strategy.
Develop a Competitive Advantage
Identify what will set you apart in the long run. This could be:
- Proprietary technology
- Unique partnerships
- Superior customer service
- Network effects
Focus on building and maintaining this advantage as you execute your strategy.
Plan for Scalability
Think ahead to ensure your product can grow without breaking. Consider:
- Technical architecture: Can it handle increased load?
- Team structure: How will you organize as you grow?
- Processes: What needs to be standardized or automated?
Building with scalability in mind from the start can save headaches later.
Anticipate and Mitigate Risks
No strategy is without risks. Identify potential obstacles:
- Market risks (e.g., new competitors, changing regulations)
- Technical risks (e.g., scalability issues, security vulnerabilities)
- Business risks (e.g., funding challenges, key personnel departures)
Develop contingency plans for each major risk you identify.
Creating an effective product strategy is a journey, not a destination.
It requires a blend of analytical thinking, creativity, and adaptability. By following these steps and constantly refining your approach based on real-world feedback, you’ll be well on your way to developing a product strategy that drives success.
Remember, the best strategy is one that’s actually implemented. So once you’ve crafted your product strategy, the real work begins – bringing it to life through focused execution and continuous improvement.
The product strategy helps managers prioritize features and timetables faster to meet the most critical customer needs.
A well-planned product strategy focuses on the collective product development efforts and customer needs, market positioning, and the ultimate business goals. This focus on value enables the team to deliver a product launch with every feature in alignment with the original vision.
- Provides Clarity on what the team should do, resulting in increased productivity.
- Enhances Strategic Decision Making by laying the foundation for a thorough roadmap. Following some product roadmap examples can help you figure out which one will work best for you.
- Prioritizes feature sets and future actions of organizations so that the roadmaps are dynamic and meet customer needs
10 Product Strategy Examples
A product strategy is a high-level, general plan that helps product managers go into detail.
It does not tell what exactly to do but gives essential directions on what can be done to launch the product or features in the best possible way.
We talk about 10 product strategy examples below along with a brief around each one of them. The idea is to make you aware of the space & help take informed decisions for your own contexts.
1. Differentiation strategy
Differentiation is a product strategy example when the product is unique compared to existing solutions in the market.
The special features, which competitors don’t possess, become highlights in communication. The idea is to draw customers in through capabilities they may need to extract maximum value from the solution they are using. This can be achieved by developing an entirely new feature, including related features, and providing a comprehensive experience, increasing the product’s usability.
Example – Take the example of Snap (earlier Snapchat) in the Social media space. It continues to co-exist with other social media companies such as Instagram, Facebook, Twitter through its differentiated offering.
2. Quality strategy
Quality and reliability matter a lot in B2B software, as business-critical functions rely on them.
Ensuring the highest quality of reliability, experience, and capabilities positions the product as the must-have solution. If the customers get accustomed to the high-end aesthetics, this is a good product strategy example to get easier buy-ins into the ecosystem and offer more solutions. It is also important to measure the customer satisfaction using metrics like nps vs csat.
Example – Look at the ITSM space. Legacy giants such as Servicenow are ceding their marketshare to a relatively new entrant such as Jira service management.
3. Cost strategy
Making a good yet affordable product is the idea behind the cost strategy.
Products using this strategy are usually priced at a lower price point than their competitors. New entrants into an established market tend to start with this strategy, especially if the product differentiators and other value-centric aspects are incremental.
This strategy is contingent on gaining enough customers and streamlining the development process. The cheaper it is for product managers to develop a competitive product, the lower they can price it – but the focus should always be on improving the value provided.
A pricing race often makes customers skeptical, as the belief that an inexpensive product can’t be of high quality is prevalent. This is a good product strategy example that nudges customers to pay more for something they believe adds value to their systems.
Example – Consider SpaceX & its reusable rockets. Their engineering innovation has helped them achieve success through their cost strategy. They charge fraction of a cost for launching satellites into orbits as compared to the traditional leaders in that business.
4. Focus strategy
Product vendors operating in the B2B sphere can gain much using a focus strategy.
Focus strategy allows organizations to develop features for a well-defined segment. It helps them target a particular demographic, geographic area, or problem segment across industries.
Having a place to focus on also allows vendor organizations to be the thought leader in the sphere, which can attract newer clients looking for similar solutions.
Example – Tesla is a good example of a focused product strategy. In its initial days, Tesla’s strategy was to enter at the high end of the market, where customers are prepared to pay a premium, and then drive down market as fast as possible to higher unit volume and lower prices with each successive model.
5. Pioneer strategy
Providing quality without considering pricing is a high-risk, high-reward strategy, but product organizations can pull it off by hiring the brightest minds and building the best versions possible.
But this expertise is costly, and the product’s final pricing reflects this.
These products are often considered ‘luxury,’ but areas like data security and finance transactions need the most evolved versions of products at all times—which only makes the product more desirable. This example of product strategy forces customers to streamline their processes to make the most out of the solution they’re using.
Example – Inevitably, Apple comes to the mind. Although they have successive incremental improvements in the iPhone segment for past few years, they continue to come up with products that are at the edge such as Apple vision pro.
6. Niche strategy
While focus strategy narrows the field of competition, niche strategies allow product managers to focus on narrowing the features to address the specific needs of a small group.
Unfunded startups usually start with a niche strategy by serving a very narrow target audience to test their assumptions. Once they have a foot in the door, they find ways to expand their relationships & grow their target audience as well as their products.
Example – Our apps on the Atlassian marketplace are a classic example of the niche product strategy.
7. Challenger strategy
This global product strategy example is similar to competing on price strategy but also encompasses competing on features provided by the market leader.
The aim is to challenge the price, efficiency, or feature set status quo.
Product managers should be clear about their product’s vision to identify areas where they can challenge the leaders. They can do so by creating an economical version of a popular product, a faster version of a feature, or any process that saves time and resources for customers.
Example – Challenger banks are called ‘Challengers’ for a reason! They try to challenge the traditional banks on various aspects – such as convenience & user experience.
8. Equivalence strategy
This is a strategic approach where a company aims to compete by offering products that are nearly equivalent to those of the leading competitors in the market.
Subtle differentiation underpins this product strategy example.
Example – Observe the smartphone market over time & you immediately understand the equivalence strategy. You will notice that the hardware & software seems to converge in the same direction for all the different brands.
9. Requests-based strategy
When managers and teams are clear about the goals of the product, they can be dynamic about their strategy.
By establishing a robust feedback mechanism, product managers can streamline feature requests and evaluate them against the product vision. These requests can be discussed in an open forum involving all team members, and decisions on further actions can be taken.
Example – Typically, this strategy is used in the initial days of a product to test the customer traction. More or less, all products in their MVP stage rely on this.
10. Upselling strategy
Suppose the product is matured and serves a saturated market. In that case, it makes sense for product managers to consider adjacent problems that can be solved – and increase the target market.
Product managers can emphasize user benefit by measuring and analyzing product awareness, sales leads, or customer lifetime value (CLV) results.
Example – Atlassian uses this strategy effectively to move customers from standard version of Jira to premium by offering better features.
Common Mistakes to Avoid in the Product Strategy
Product strategy examples we highlighted above are exactly that – examples. Product strategy in itself is a broad domain & it is impossible for anyone to create an exhaustive list of all such strategies.
More importantly, avoid following mistakes around the product strategy:
- Not documenting long term goals clearly. Without a clear vision, your team may lose direction.
- Ignoring customer feedback & building the product that does not actually meet their needs.
- Over complicating the product strategy can slow down your progress.
- Blindly sticking to a single strategy (from one of the examples above). Majority products combine one or more strategies to achieve their goals. And these too keep on changing depending on the product lifecycle & the market maturity.
- Not experimenting with various product strategies. Same product strategy with all other conditions being same, might work wonders for one product over the other.
Conclusion on Building a Product Strategy
Ideally, product strategy should focus on creating a product or solution – but to arrive at that, product managers have to sit down with various stakeholders like business, customer service & sales teams to identify unique user needs. By understanding how customers use the product, they can understand the reasoning behind any issues raised. This understanding helps them assemble a list of new features or processes they need to work on and build the strategy on a solid foundation.
